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Obama and Brown Pledge Cooperation

President Obama with Prime Minister Gordon Brown of Britain after meeting in the Oval Office on Tuesday.Credit
Doug Mills/The New York Times

WASHINGTON — Prime Minister Gordon Brown of Britain used his first meeting with President Obama on Tuesday to raise the prospect of “a global New Deal” that would set common principles for regulating banks, declaring that the fiscal crisis could help to overcome past resistance to increased oversight across borders.

In an appearance with Mr. Obama at the White House, Mr. Brown did not provide specifics about the components of the initiative. Mr. Obama, after saying he would not allow policy to be set by the day-to-day gyrations of stock markets, said the issues most important to him were halting “massive over-leverage” and “huge systemic risks taken by unregulated institutions, as well as regulated institutions.”

Mr. Brown was chancellor of the Exchequer, Britain’s finance minister, during the Asian financial crisis of the 1990s. But he indicated Tuesday that the reforms set in motion by that crisis — many of which fell by the wayside once prosperity returned — would not have been sufficient to handle the complex financial products that contributed to the current stock sell-off as it has raced around the world.

“It’s almost like a power cut that went right across the financial system,” Mr. Brown said. “And we have got to rebuild that financial system.”

While Mr. Brown referred to his idea as a “global New Deal,” that phrase was not repeated in public by Mr. Obama. Aides said the president also did not repeat the slogan during the lunch.

In private, American and British officials have spoken of setting up regulations that would govern international banks’ transactions wherever they happen in the world, so that banks could not find an offshore banking center where, for example, they could take risks of a kind that would not be allowed in New York or London.

The two men also suggested that they needed to find ways to build firewalls in the system, with Mr. Brown saying that under current, lax global regulatory coordination, “A bad bank anywhere can affect good banks everywhere.”

The meeting between the men was understated. While President George W. Bush often entertained Prime Minister Tony Blair, Mr. Brown’s predecessor, at Camp David, on Tuesday there was simply a private meeting in the Oval Office and a lunch at the White House. Thyme-roasted chicken and nine-herb ravioli were served in the old Family Dining Room.

Mr. Obama tried to alleviate concerns in Britain that he was less interested in the trans-Atlantic relationship than his predecessors were, speaking of “a bond there that will not break.”

He suggested that the countries were being driven closer together by their shared commitment of troops in Afghanistan.

“This notion that somehow there is any lessening of that special relationship is misguided,” Mr. Obama said, speaking to reporters in the Oval Office. “Rest assured that the relationship is not only special and strong, but will only get stronger as time goes on.”

During their meeting, Mr. Obama and Mr. Brown were trying to set the groundwork for a gathering next month of leaders of the Group of 20, the nations with the 20 largest economies.

The idea of global financial cooperation is one that both leaders find appealing, but once the specifics begin to be put on the table, many constituencies are likely to balk at rules set by foreigners.

“It will be easy to get the G-20 into a room to ratify the idea that the world is in trouble, and that they need to cooperate,” said David Rothkopf, who worked in the Commerce Department under President Bill Clinton.

“Getting them to actually sign on to a new international architecture and to get out their checkbook to give billions more to the World Bank and the I.M.F. and to set up common regulatory systems will be very difficult. Yet if they stick to platitudes, the markets will give them a failing grade.”

Mr. Obama cited one of the most pressing of the regulatory issues, making sure “that problems that exist in emerging markets like Hungary or the Ukraine don’t have these enormous ripple effects that wash back onto our shores.” In Europe and Asia, though, the problem is seen in reverse: A crisis that began on American shores is now washing away smaller economies.

“There is the possibility in the next few months of a global New Deal that will involve all the countries of the world in sorting out and cleaning up the banking system,” Mr. Brown said.

The meeting on Tuesday was the third time the two men had met, but it was the first since Mr. Obama took office. Aides said the men spoke mostly about the economy, but also discussed Afghanistan and the Middle East peace process.

A version of this article appears in print on , on page A10 of the New York edition with the headline: Brown and Obama Discuss Global Rules for Banking. Order Reprints|Today's Paper|Subscribe